I'm serving as Vice President, Marketing at iBASEt. Previous positions include product marketing at Plex Systems, senior analyst at AMR Research (now Gartner), marketing and business development at Cincom Systems, Ingram Micro, a SaaS start-up and at hardware companies. I am also a member of the Enterprise Irregulars. My background includes marketing, product management, sales and industry analyst roles in the enterprise software and IT industries. My academic background includes an MBA from Pepperdine University and completion of the Strategic Marketing Management Program at the Stanford University Graduate School of Business. I teach MBA courses in international business, global competitive strategies, international market research, and capstone courses in strategic planning and market research. I've taught at California State University, Fullerton: University of California, Irvine; Marymount University, and Webster University. You can reach me on Twitter at @LouisColumbus.

Sales VPs for years have been test-driving SaaS-based CRM systems, piloting them with sales teams to see if using them leads to higher sales and greater customer retention. Marketing VPs and Chief Marketing Officers (CMOs) also continue to pilot SaaS-based web analytics and marketing automation applications.

What’s been missing from these pilots is the ability to bring CRM, marketing automation, sales management and web analytics systems into existing enterprise IT architectures just as fast. This is changing quickly. CRM vendors have been quick to respond to the challenge, offering Application Programmer Interfaces (APIs), integration adapters, connectors and from larger vendors, integrated bus architectures.

What the Hype Cycle for CRM Sales, 2012 Means

CRM’s real value is in unifying an entire enterprise based on its ability to sell, serve and retain customers better than before. Gartner shows this is a high priority for its CRM clients by underscoring which technology and application areas of the hype cycle are responding to his market dynamic, and which aren’t.

This Hype Cycle also reflects the urgency I hear from Sales VPs who want to get in control of the complex compensation, quota, territory management, job appraisal and sales coaching responsibilities they have. While each of these areas is essential, many companies, even those in enterprise software, have ignored these areas, allowing them to stay manually based. Gartner calls this area Sales Performance Management (SPM) and shows it has the highest benefit of all SaaS-based sales management applications in the next two years. Gartner’s analysis captures the time shortage that Sales VPs I know are facing; they have to get to high quota levels while also managing a diverse set of leadership responsibilities as well. The Hype Cycle for CRM Sales, 2012 (G00234919) is shown below:

Gartner estimates 35% of all CRM implementations today use SaaS, growing to over 50% by 2020 according to their projections. In 2011, more than $5 billion was invested in sales applications.

Sales, Customer Service, Social CRM and Marketing are the four fastest-growing areas of enterprise Sales applications on SaaS. Campaign Management is increasingly quickly, up from 19% using SaaS in 2010 to 29% in 2011.

Gartner sees significant growth in Configure Price Quote (CPQ), projecting a market of $300M in 2012, up from $240M in 2011. Gartner is due out with a MarketScope on CPQ shortly, where the 15 major vendors it tracks in this area will be ranked. 40% of existing implementations are on SaaS, and that proportion is increasing relative to licensed versions. Of the 15 vendors in this market, 12 have announced SaaS-based versions of their applications.

There are 3.8M Sales Force Automation SaaS users globally today.

By 2017, 25% of companies adopting CRM will have extended their customer service contact centers to include social media including Facebook, Twitter and other emerging online communities. As of 2012, Gartner is seeking only 1% of companies integrate social media into their companies’ departments and work flows to ensure a consistent customer experience.

Price Optimization will experience transformational growth in two to five years. Gartner sees this area as one of the most promising across all CRM Sales as can be seen in the Priority Matrix for CRM Sales 2012 below from the Hype Cycle for CRM Sales, 2012. The research firm has defined this market as including price analysis, price optimization and price execution. Gartner estimates this market was $180M to $190M in 2010. Vendor competing in this market include Accenture, Deloitte, Pros, Vendavo, Vistaar Technologies and Zilliant.

Social CRM (SCRM) for Sales is at the Peak of Inflated Expectations, with 90% of spending for these applications being generated from B2C companies. Gartner expects B2B companies to lead the growth of these applications through 2015, increasing spending from 5% of total SCRM sales in 2011 to 30% by 2015.

SaaS-based CRM sales within enterprises are expected to reach $4.48B in 2012, growing to $6.3B in 2015. The following table from the report Forecast: Software as a Service, Worldwide 2010-2015, 2H11 Update provides a frame of reference for SaaS-based CRM growth overall.

Salesforce leads all CRM vendors in market share growth, advancing 2.8% from 2010 to 2011 according to Gartner’s’ global market share analysis shown below. Salesforce attained 26.9% revenue growth from 2010 to 2011 ($1.3B to $1.6B) and 36.7% growth from 2011 to 2012 ($1.6B to $2.27B). The future momentum of Salesforce is in unifying the enterprise, redefining corporate IT in the context of the customer. Their recent acquisitions show analytics, marketing automation and development platforms are key priorities. The following table is from the report Market Share Snapshot: CRM Software, 2011 (G00233998).

Bottom line: Making CRM strategies successful has to start with a common vision and urgency for results. Both are happening quicker in CRM than ever before, driven by a much clearer understanding of what enterprises need to more effectively attain their goals.

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What a great article really capturing some of the gains CRM software solutions are continuing to make. I couldn’t agree more with your concluding thoughts on what it takes to make CRM strategies successful starts with a common vision and urgency for results.

I was not surprised to learn that “Sales, Customer Service, Social CRM and Marketing are the four fastest-growing areas of enterprise Sales applications on SaaS.”

Of the Gartner statistics you site here, I’m curious to hear your take on the issue of cloud adoption varying significantly across CRM software categories.

I can’t help but wonder about the success regarding adoption rates across CRM software categories. Is it possible this is due to an issue with urgency or may be connected to something else. Do you have any additional thoughts you can share.

Erika, Thanks for taking the time to visit this blog and for your insightful comments and observations. I appreciate it. You immediately have honed in on the same question I was tempted to keep writing on. Why cloud adoption varies significantly across CRM categories can be attributed to several factors, with the most significant I’ve seen being how much control line-of-business leaders have over a given functional areas’ budget. I think CRM software adoption rates for Sales, Customer Service, Social CRM and Marketing are all growing so quickly because VPs and C-level executives of those departments are willing to experiment with cloud-based applications and see if they contribute to their strategic goals. CRM software categories that are by nature more dependent on backoffice integration tend to lag in adoption. The greater the autonomy of budget, combined with the pressure on a given area of CRM to deliver results, the higher the adoption of cloud-based applications. Another factor is the relative ease or difficulty of tailoring a given CRM application to the specific needs of a department. Salesforce and others have made significant strides on the flexibility of customizing their applications for sales forces relatively quickly. It is becoming common to find Salesforce developers as part of Marketing Operations teams and in very large companies, in Sales Operations. A third factor is the relative ease of defining analytics and metrics to show the contribution of a pilot. CRM vendors’ depth of support for analytics by CRM functional areas varies significantly. Many excel at Sales, Customer Service, increasingly Social CRM (including social media monitoring) and Marketing . In other areas of CRM, companies struggle with creating metrics that can defend a pilot and lead to long-term adoption of the system. Additional factors include the level of integration possible with legacy, backoffice systems, in addition to several others. This topic is a great idea for another blog post. Thanks again and I will continue to pay attention to research in this area and will write about it in the future. Best Regards, Louis

I’ve been using http://www.ZestCRM.com for almost a year now and have loved the speed and reliability of their product. I know they aren’t a huge company but they do an amazing job and I saw they weren’t listed and figured I would send them some props.

Thank you very much and I enjoyed working with you. And congratulations on joining Oracle as Principal Product Manager on CRM Service Cloud. You’re a great product champion and I know you will excel, Oracle is very lucky to have you. Please let me know however I can help you. Good hearing from you. Louis

Really interesting article – in particular the priority analysis, as setting the right priorities is a critical success factor all of us face daily. I would be interested to know which markets were taken into consideration. Also, which industries were included? Do you find a common CRM trend across industries or do you find significant differences?